Jack Ma, Chairman and CEO of Alibaba Group, delivered the closing keynote address at the conference “China 2.0: Transforming Media and Commerce”, hosted by the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) at the Stanford Graduate School of Business, on Sept. 30, 2011. Below is the Edited transcript of the full speech, so entertaining, so true, so enlightening…
Introducing Speaker: It’s a great pleasure for us to give a warm welcome to Jack Ma. Thank you.
Jack Ma – Chairman and CEO of Alibaba Group (2011)
Thank you. It’s my great honor. And I was invited about months ago. And it’s — I did not expect people said this is a very sensitive time for me to talk, because about Yahoo!, about Alibaba about this and that. But a promise is a promise I come.
Today any questions you have. I will answer every question you have.
All right, so I’ve been here for 15 days and I plan to spend one year here. And nobody knows, my company did not know, that I’m going to spend a year here. Guess people ask, why you’re here? Are you ready for getting Yahoo!? No.
Everybody was very sensitive when I said I’m going to spend one year there. And I just come here, I’m tired. Too tired, in the past 16 years, I start my business. When I started in 1994, found the internet, and I got crazy about the internet, and give up my job in the teaching, and like, I call myself like a blind man, riding on the back of blind tigers, jumping around still kicking, and still surviving, and then join the government organization for 16 miles, and not successful, start Ali Baba 1999.
And we built up the Alibaba. We’re lucky enough to have the Taobao. We have the Alipay. We have Ali Cloud Computing. And so many things after 12 years, I say, I need some time to rest. Especially this year, was so difficult for me. I do not expect I prepare for twelve year, what’s in China called (Chinese), this is our 12th year for Alibaba. At the beginning of the year we have the moving for the Alibaba to be CEO because of the custom cheating things. And then we have the Alipay about the VIES, I still don’t know what the VIE is, right?
And then we have the Ali Taobao separated into four parts. So many things that really make me feel tired. And I said, well, why not give up one year. Because next year is my personal [Chinese] which is, could be much more difficult.
This year was very tough and difficult. I believe next year is going to be tougher and more difficult and more complex. So I got ready for that. And I think I need a rest, so in order to, for another three, four years how to work it. Because this three years is not my job. If something wrong, criticize this president of Taobao, CEO of Alibaba and Alipay, it’s their fault. Because three years, their fault.
Three years later, something wrong, my fault. So, I come here and I will spend most of my time in the States. And then thinking, relaxing and just two days ago, I picked up on my golf, and here, and just relax. So nothing about, the things people think about.
So, we are a very lucky company. And there is no chance that we survived. I don’t have any sort of backgrounds, a rich father, or strong uncles or and I remember 1999, I came to Silicon Valley looking for venture capitalists. I talked to a lot of venture capitalists and I remember few days when I drove by the Menlo Park, right? I was rejected by so many venture capitalists. When I talked about Alibaba start-up, they looked at me strange. What? Alibaba, what are you talking about?
Right I went back to China with nothing, no money, nobody invested in me. But I’d full of confidence, I saw the American dreams. At that time 1999, I walked on the high express way, and on the high express way every evening full of cars and in the parks of the companies, and some weekends full of cars. And people working day and night, and now, this is something I believe is going to happening in China.
Without getting any venture capitalists, but I think I went back China with the American dreams. And we started the business there, and after 12 years, you know, a lot of things happened. We built up the B2B and nobody believed the B2B would work, because the B2B at that time was good, but Ariba, I don’t know if still there. Yeah, Ariba, ariba.com, [inaudible] and commerce One, and these are very famous B2B companies. People say, how can you do B2B in China? Because B2B in the US is the focus of big companies. They focus on buyers. And we believe there’s no big companies in China. And I don’t see there are big companies, in the short term that China would have a lot of big companies. Because big companies only SOE. SOE they do not need e-commerce. They need is government policy, right?
So we focus a small business. We believe, China, the small business, the private sectors are the future. So we’re focused on that. And the B2B in the U S they focus on buyers, they want to help the buyers to save the cost, to save the time. We believe don’t teach the SME, don’t teach the small business how to save the cost because, they know much better than you do. You should help them how to make money.
So we focus on helping small business. We focus on helping them to make money, to sell things abroad. Very difficult to do business at that time. But after 12 years we got more than 58 million small business around the world, using our services. That model is not very sexy compared to Tencent, Baidu we do not make that much money, like online gamings. But we can sleep well in the evening, because the money we make not online gamings. The money we make, is helping small business to survive, to get business opportunities, which I feel very proud of that.
And today, as always, I never feel proud of how much money we make. I feel proud how much impact we can help the others, especially small business. Before the history of internet, no company can help over 50 million SMEs. Today, we are trying. And I feel proud of that. This is the first company. And people say, Jack, if you make Alibaba successful, that means you, you are pulling a million tons of ship on the top of the Himalayas. And I say yes, we will carry that thing down. And we did.
The second company is called the Taobao. And everybody say, oh, my God you are competing with eBay. I said, why not? China needs an e-commerce site. And builder of the China market takes efforts, takes time. And takes great effort, if you really want to build up something. So at that time, people say, there’s no chance. Well, if you never try, don’t, how do you know there’s no chance? So we tried, and I said, we — if eBay are the sharks in the ocean, we are the crocodiles in the Yangtze river. Never fight in the ocean. Let’s fight the Yangtze river. It was difficult. It was a lot of fun. And we survived. They got a 90% market share at that time, today for C2B is what, we’re like a 90% market share and lucky. Just lucky.
There are lot of things [that] can be discussed in the future. Today, people always write about the successful stories about Alibaba. And I really don’t think we are so smart. We made so many mistakes. We were so stupid that time. So I think some day the book I personally really want to write about as I said is Alibaba 1001 Mistakes, these are the things people should remember, people should learn.
If you want to learn how the people, other people succeed it is very difficult. There are a lot of lucky things right there. But if you want to learn, if you learn how people fail, you will benefit a lot. And I always rely to read those books, talking about how people fail. Because, look, if you look into it, any company that failed, the reasons why they failed almost the same. And that really matters.
So, Taobao succeed and then we have the Alipay because everybody says China oh no credit system, banking is terrible, logistics terrible and how can you do e-commerce? I never tell, it was just like today I come here with no, without a PPT, without my business. I’m not coming here to sell your business, sell my business because I don’t have stock to sell to you guys.
But I think because China is not good at logistic, not good at credit system, not good at a banking system. That’s why we need entrepreneurship. That’s why we go, we should go and build them up. So, I believe if there is no, you build it up, later this becomes the standard of China. And I believe China needs that.
I remember six years ago I came to the states, I told the USA audience, I believe five years later China will have more internet users than the USA. People said no. I said, well you have only 300 million population. China 1.3 billion, right, for you guys to have 400 million internet users, without anybody dying, keep on having babies you’ll take 50 years. We need five years. It’s just the timing issues, right. So let’s wait and see.
Today, we have more users. And today people say, wow, your buying capability is low. Let’s see about five years later. Five years later, today people buy, only spend 200 RMB per day, per month. Five years later, these guys will spend 2,000. And we have patience. We are young. You know, I’m old. But my people only 26 average age. They are young. Let’s wait for the future.
So Alipay was just a very – that time people say it’s stupid escrow services, right? John wants to buy things from Stephen, John doesn’t want to wire the money, and Steve does not want to give the products, so we open an account and say, wire it to us. If you’re happy, we wire the money. 4If you’re not happy, return products, return the money. People say, how stupid the model is. Well, we don’t care whether it’s stupid or not stupid, we care whether the customer wants it or not. Whether we really meet the need of the customers. It is stupid, but after 7 years, we have more than 600 million users, registered users in China using that.
So, stupid things, if you improve it every day, it’s going to be very smart. And we believe that. So today it is good, and is growing, and it’s like a PayPal, but we are bigger than PayPal right now on transaction wise.
And the last and most important, is Ali cloud computing. And not like the other companies, they talk about Ali — they talk about cloud computing, they want to sell you the hardware, softwares. We have nothing to sell you. We just want computing our own datas because the datas we have from the SMEs, because the datas we have the consumers from Taobao, datas from Alipay so we want — we believe in the future the world is going to be the data processing world. How we can share the datas with the others in a great way. Right? So, that’s the thing, that’s the business about. It’s not that, good yet, but it is very profitable. The whole company looks healthy, so we are very appreciate. We are the company full of thanks, there’s no chance we can win, now we survive.
I think, we always ask our own question, why we’re still working so hard? I talked to my colleague one day and he said, Jack, I never know that in my life, I can do that much; second I never know that the things I’m doing are that meaningful to the society. And third, I never know that life is damn set hard. We work day and night, even now. We work day and night. I get so thinner, and strange, and — I understand, life is not easy. We feel proud. Because we are changing China. It’s not how much money you make. When you see, I think — 10 years ago, when I walked on the street, people thanked me, because my Alibaba B2B, helped them to get orders across the ocean.
Today, when I walk on the street, the young people say, Jack, thank you very much. My wife and I opened a small shop on Taobao. We made a surviving, we had a great income and you know, this is meaningful thing. We make the credit means money.
Years ago, if you have a great record of credit, trust, but you’re not, you’re not rich. Today if you have a good record on Taubau, you get rich because people do business with those people who has good record. We’re teaching consumers to be smart. People say, Jack I bought something so cheap on Taobao. Is that a fake product? Yes, we do. Fake products are everywhere but we spend most of the efforts in China. 50% of the people in Taobao, they’re focusing on checking the intellectual property issues.